Olympus raided over accounting scandal

Offices and homes of executives connected to the Olympus accounting scandal have been raided by Japanese police. The move comes after a report commissioned by the company showed that losses of $1.7bn had been concealed for over a decade. However, the company did successfully file its amended accounts by the December 14th deadline imposed by the Japanese stock exchange to avoid being delisted. These restated accounts showed significantly reduced assets, and the company is now rumored to be planning to issue more shares in an attempt to raise money.

Comments

I love my Olympus C-8080, and it was made about the time these irregularities (to put it lightly) started. Maybe Olympus should have been sold off, like Pentax, to be able to start anew. Instead a culture of lying developed at Olympus. A sad end of a once brave company!

A company's board of directors that lies to its shareholders is not to be trusted at all. Calling them fools - highly paid at that - is just trying to whitewash it all.

Not surprising that the Japanese authorities suspected that organised crime was behind it all, as that is exactly what we can expect of orgainised crime: fiddle the figures, lie to the authorities, and hoodwink shareholders. And this has been going on for years and years - so not just one screen of smoke, rather a gigantic forest fire, in avoiding the truth.

When the new CEO wanted a serious, independent, internal audit he got the sack - smells criminal intent a long way.

Some scary reading this one is, Stan, thanks for finding it. What a colossal bunch of crooks, OMG, this makes our Wall Street and pyramid scheme American crooks look like inept Kindergarten pupils in comparison.

A company this rotten at the very top has to be put out of its misery and out of business, ans quickly. They have no right to prevail and continue. The Olympus name will be forever tainted with this much filth.

Chuck, yes, it's fraud, it's crime. But at least THESE crooks have left us a legacy of beautiful cameras, lenses, and in my case, a brand loyalty that is not going to evaporate overnight, as I've been using Olympus cameras more or less exclusively since my OM-1 which I bought in 1976.

You can't say the same about Madoff, Leaman's, et al ... they're just a bunch of self-interested *ankers.

Marty: Sorry to intrude, but when management lies about the actual value of something, and people invest money based on those lies, that is fraud, pure and simple. And fraud is theft, and theft is a crime, so yes, they are indeed crooks.

Maybe I'm just splitting hairs, but I'd rather believe they were incompetent fools who were just covering up their blunders, rather than people stealing money for their own personal use.

Either way, the effect is the same for the shareholders, employees, dealers and customers. This criminal activity has harmed all, and Olympus desperately needs better and more ethical management.

And that will be achieved, one way or the other. Either by some other company buying Olympus, or by Olympus finding better managers going forward.

For me the first sign was when Woodford brought his questions to the BOD, and they told him "Don't worry about this. It's none of your concern." Then I knew these people had done something terribly wrong.

It now appears that the top tier of Olympus management weren't crooks at all. Just incredible fools. They made some very foolish investments, lost lots of money, then tried to hide it from their shareholders by deceptive financial reporting means.

There is absolutely nothing wrong with Olympus that a change to better and more ethical management wont cure.

They have strong products and could have been very profitable if it wasn't for the foolish and risky financial ventures they made. And covering them up their mistakes to mislead shareholders was a very poor decision.

They have a 70% market share in endoscopes, and their M4/3 products have strong market potential going forward. This entire problem was caused by poor management practices. And that is precisely what needs to be changed.

It doesn't matter if this means being acquired by a new owner... or simply radically reforming the way they manage their finances. Either way, you still end up with a strong, competitive company.

That would kill both Olympus and Zuiko. Panasonic never keeps the brands it buys. See what happened to National and Technics. Besides, they believe putting the name 'Leica' on ordinary lenses convinces people that they're actually buying Leica lenses, so they don't need Zuiko.It must be said that Panasonic makes great electric shaves, though...

Nobody bought "National" or "Technics" from anybody. They were trade names (as is Panasonic) used by the parent company, Matsushita. National was used mostly on appliances, outside North America. Technics was used to signify higher quality than Panasonic which, at the time was considered the poor man's Sony.

You're right about National and Technics, AbrasiveReducer. Except they were Masushita-owned brands, not trade names (it isn't the same: trade names identify a company or a subsidiary). Still I believe that, if it became Panasonic-owned, the Olympus brand would sooner or later disappear too.By the way, Panasonic is currently curtailing production and firing workers, having already stopped building plasmas. They may not be in a financial position to buy Olympus.

Sorry I was a bit off in my description of trade names. It seems strange now, what with Panasonic/Leica cameras but I can recall when the first Technics turntables appeared, marked "Technics by Panasonic". Word got back to Japan that Panasonic was not synonomous with the highest quality so the Panasonic name was removed entirely and it worked. Now, if I could just remember what LG actually stands for (it ain't Life's Good).

BTW, regarding poor Olympus; why would a company (Panasonic) that has the abilty to make cameras and lenses, buy another company that makes cameras and lenses? To learn the secrets to making cameras and lenses?

AbrasiveReducer, I don't know what LG stands for (not certainly 'Life's Good'...), but it is the south korean company formerly known as GoldStar. My father had a GoldStar stereo system, and both the amplifier and the tuner were surprisingly good!More to the point, an uncle of mine used to have a National Panasonic turntable. I also remember when Panasonic's money served to nurture Hiro Matsushita's illusions of being a great racing driver. (He wasn't - he was Indy racing's laughing stock!)About your last paragraph: while I don't believe Panasonic will buy Olympus, I feel they've still got something to learn from Olympus, as one of the commenters here recognizes Panny's JPEGs are inferior to Olympus's. Which is confirmed in every comparative test I've read until now. After all, and unlike Olympus, Panasonic is a relative newcomer to the world of photography.

Abrasive... and that is exactly why you never see anything like "Lexus, by Toyota" or "Infiniti, by Nissan." In fact these companies require that their dealerships must be so many miles away from Toyota or Nissan dealers lots... even if the same person owns both.

The only possible reason I can imagine for Panasonic wanting to buy Olympus would be to obtain patents on things like IBIS, the dustbuster, or the jpeg engine. But those are easy enough to license. Or, perhaps just to eliminate a competitor.

Most of the Olympus cameras and lenses are duplications of Panasonic products.

Panasonic "bought" Sanyo, and is axing the entire company by March of next year. No more Sanyo, so sorry. If Panasonic "rescues" Olympus, there won't be any sign of Olympus left w/i six months. Facts of life in the business world. The BOD really did Oly in this time.

Kodak bought up lots of camera makers and other companies over the years. There is nothing new about companies growing via buyouts. Leica microscopes merged with various companies before being bought out by Danaher. Danaher also took over B&L, Spencer, Cambridge and some other microscope companies and sell all of the products under the Leica name now.

I'm wondering what the police expected to find (or did find) in the homes of the Olympus officials.

On an aside, it seems that MF Global "borrowed" millions from its customer accounts to invest (risky speculation) in foreign bonds that were not properly rated. It turns out this might have been legal.l

Re: LGIt wasn't two brands...the name of the Korean company was originally translated into English and the company name was Lucky Goldstar. They used the name Goldstar as their brand name on all their video products originally. I guess they thought the name sounded either "too Asian" or "too long" and shortened it to simply "LG", like many other companies before them. (Remember, JVC originally stood for Japanese Victor Company when they were the manufacturing subsidiary of RCA.)

Sad that a few big wigs inside Olympus have done this to the trademark. There are so many great scientists, designers and inventors within the company who produce outstanding pieces of modern techno products only to be pulled down by these twisted board members.

Don't count on it, financial crime is the most easily skated on, with few every being prosecuted and even fewer of those which are results in any prison time. Not one banker or other crook on Wall Street which tanked the world's economy will ever be tried. They have the ability to lobby for special laws that exempt them for liability. Even in the cases of SEC fines, rare in itself, the fines are usually a small fraction of the unearned profits from the crime. Steal a billion and there is a 1/50 chance in a fine, and it will be 1 million. The changes of a poor person stealing a loaf of bread serving time is vastly greater than a financial crime resulting in 1,000,000 family bankruptcies ever being prosecuted or the responsible one even being fired.

The tragedy is that Olympus make beautiful cameras, wonderful optics, and are major innovators because of whom everyone benefits.

Who brought you the self-cleaning sensor? Olympus. Who brought you the 10m-submersible point-and-shoot? Olympus. Who brought you live view in an SLR? Olympus. The list goes on, certainly back to when I started photography (my OM-1 and 4 prime Zuiko lenses, bought new in 1976, still works perfectly); the Pen half-frame cameras (before my time) ...

... the idea that this whole pinnacle of excellence could be brought down by a bunch of crooks that should have been working for Leaman Bros - or sold off and diluted into a lesser brand - is very sad indeed.

Most information about the future of Olympus relies on rumours and paints a 'worst case scenario' picture which is not quite plausible. I don't think those scenarios will happen, but it is necessary that incumbent members of the board resign in order to restore investors' trust. Only Michael C. Woodford is in position to make that happen. I'm not MCW's fan, and I don't know whether he's the best CEO for Olympus Corp., but as I see it, he's the only alternative to the incumbent board.

I don't see Fuji buying Olympus. They just purchased another medical image company for $995million last week. If Olympus medical imagery division stays profitable, I find it hard to believe they would sell off the camera division. For those that are so appalled by these findings, you really need to take a good hard look out your door at all of the companies right in our own back yard that are run by crooks. Start with the banks. Reading through the other comments, people seem to have quickly forgotten how many companies were bailed out here in our own country. If the numbers I have read are accurate Olympus employs 35,000 people. Many feel that the Japanese government will not let them fall due to how big of a corporation they are. Here in the good ol U.S our companies are filled with crooks who mismanage their money and screwed the American people. But we saved em to prevent a bigger melt down didn't we? One way or another I think they will pull through this.

To be fair though, the bailout was only 7.7 trillion. And they did charge them a reasonable 0.001% interest. And it's not like 7 trillion of that was done without even consulting Congress. And then it's not like they then used most of that money to buy treasury bonds at 3%, so they literally got free money, and got paid for it.

The cameras remain a better investment, for camera users, than they are for the shareholders or creditors. Since the central management is tainted by collusion or it "I didn't know nuttin'" equivalent, the best thing for the Olympus camera brand would be for sale to a more responsible and solvent firm. Very likely, this could either lead to use of the Olympus name to peddle many budget cameras, or else curtailing the Olympus P&S models (which face heavy competition) and confine the branding to some higher end goods. Meanwhile, some Olympus goods are available at discounted prices. People should probably not be afraid of a "good value." Five years from now, most of those cameras will remain quite functional. Based on some people's claim that they buy and sell their equipment practically every other week, 5 years are a long time.

I previously owned an Olympus E-20P, an E-1 and an E-3. I still have the brilliant E-1 even though I shoot Nikon these days.

What's been going on at Olympus appalls me. Reading about the goings on in Japan is more like crime fiction than real life. I just hope they throw the wrong-doers in jail and lose the key, or maybe they'll do the honourable thing and fall on their swords leaving a fine company to carry on and salvage it's reputation.

(If a certain Olympus director has been hiding his personal wealth under other names though, It seems likely that these are not honourable men).

Would be nice to see tailored NEX-7 sensor in a mFT body. To be honest mFT sensor performance (DR in particular!) is the ONLY thing preventing me from getting into this system. I’m still sticking to Oly E-1, which I had got some 6 years ago, since there has been no camera so far from Olympus that would have significantly better DR performance then E-1. The E-450 I got for a handful of peanuts last year is just a shame with this regard and mFT are no much better :-(

I recently purchased a second Olympus E-1 for £150 with only 3756 shutter trips. Practically brand new! Together with the Olympus 14-54mm lens it is an excellent system. This particular lens is as good as my Canon 28-70mm f2.8 L that sits on my 1Ds. The E1 makes great A3 prints! I really don't need any more. Great kit from Olympus. The E-1 uses a Kodak sensor, so, yes, Olympus should source a decent sensor in their 3/4 and m3/4 cameras. I wish they would.

Olympus has almost 100 years of history. It would be very sad to see this august company end. I really hope it survives. I love all my olympus cameras, I have rather quite a number (mainly Pens, Pen FT, a number of Trips and M cameras and my E1, all of which I still use).

Most people are more concerned about their own camera systems and warranties instead of the more important issues. A degree of that is understandable. The difference between western and eastern thinking I suppose. Westerners are more concerned about the impact on the self. Whilst traditional thinking is more concerned about the dishonour these men have bought upon the whole Olympus family of users.

Years ago, these men would be asked to do the honourable thing, that's if they hadn't already done it by choice. Perhaps honour now means nothing in Japan as it is meaningless in the west.

I hope Olympus survives and continues to make excellent products, and with its honour restored.

I understand Mr Kikukawa, Olympus' former CEO, has been putting his personal assets under other people's name, which says it all about his honourability...I share your concerns about Olympus, yet I believe there are reasons to remain optimistic. In the meantime, the whole thing seems to be coming down to a subterranean fight between Michael C. Woodford, backed by western investors, against the incumbent board to take over Olympus' administration. I don't care who wins, as long as Olympus Imaging Corp. continues independent and making great cameras and lenses.

According to news at yahoo Japan, Sony,Panasonic and Fuji Film are fiercelyfighting to take over Olympus. Olympus medical equipments are already well known in the industry and now Sony is seriously considering to enter medical equipments business. Whoever succeeds in taking over Olympus,they will be in good hand.

"Whoever succeeds in taking over Olympus,they will be in good hand."The only company of those that you claim are queuing on their doorstep for a takeover that would keep the camera business alive would be Panasonic. Sony would bury it (eliminating internal competition against their NEX line) and FujiFilm has lost the plot a long time back... The DSLR line would anyways be dead with any of the three.

Olympus may sell the camera side as this would be a quick way to gain entry for suiters and shed the negative revenue part of Olympus.. Read Rutgers or other news sources, this is very interesting and very complicated. This may be very serious for Japanese business forcing changes in the board room.

Oly will become sick and will be taken over by some company , maybe even chinese......Japanese products are becoming history very soon , the world is already dominated by Chinese and Korean Products.......8-((

Olympus is most likely history, like Saab is. Question is, will there be a buyer coming forward for them, and fast? Investment-wise, it's best to stay away from Oly products until the dust settles one way... or the other. Sanyo projectors are closing down for good, Panasonic bought the company and is killing the brand early next year. It's happening all around us.

Still, I am sort of also hoping that Panasonic will be able to gobble up Olympus, or at least buy some of Oly's technology and recruit that company's brightest brains.

The Saab comparison is weak. Olympus has the dominant share of the global endoscopy market, which is far more important to the company than their cameras. Saab was never a market leader outside Sweden and has been limping along for many years.

Olympus may yet fold, but I believe the scandal news is finally becoming more positive. They met the delisting deadline, they appear to be making credible financial statements for a change, and they're working on legitimate sources of funding. I have no hesitation about buying Olympus m43 products.

The Saab comparison is plain foolish. Saab had been bought by General Motors, Olympus never belonged to any group. When GM decided to slim down its portfolio, it killed Pontiac and Saturn, and put Saab to sale. And GM was not hit by a scandal, it was a victim of the financial crisis that had to be bailed out by USA's administration. And why would anyone want Panasonic to buy Olympus technology and recruit its brains? For God's sake, Olympus makes cameras, Panasonic makes vacuum cleaners! It's true, though, that if Panasonic were to buy Olympus, they'd kill the brand - just like they did to National and Technics. Mr. Carver, who seems to have some bitter feelings against Olympus (God knows why), would apparently love it to happen. I wouldn't - and I guess I'm not alone.

Kikukawa and is collaborators wrecked Olympus, not foreigners, not even that irrascible Brit so many people strangely blame more than the fraudsters. It's chilling how many people will hug or condone crime or think it a grand thing to keep a Ponzi rolling.

@M1963, if you think Olympus stands alone in this, YOU are plain foolish. It is most likely Olympus belongs to either Mitsubishi or Mitsui Keiretsu. If Kikukawa was embazzling Olympus funds, then he had to be doing it with some other people from that Keiretsu. In Japan, it is impossible for one company to take action without support from his brother companies within that Keiretsu structure. Some people in Japan are viewing this as an attack on the Keiretsu Olympus belongs to, possibly as a retaliation of some sort. As they been saying in Japan for the last hundred years, Business is War. By the way, there is a strong indication that Panasonic belongs to the Keiretsu Olympus is part of.

HIScamera: it is obvious you misread my comment. What do you mean 'if you think Olympus stands alone in this...'? Where did you read that? I was talking about shareholding and company ownership, an unrelated subject. Maybe you should have read my comment carefully before getting enraged about something I didn't write and personally insulting someone you've never met. Your comment is deplorable.

@M1963, so when you call someone foolish, it's okay because it's you, huh? That's no insult, I suppose. You did say, and I quote, "The Saab comparison is plain foolish. Saab had been bought by General Motors, Olympus never belonged to any group." Carefully research when you make such remarks, because Olympus DOES belong to a group. Since Panasonic belongs to Mitsui Keiretsu, and Panasonic has shared resources with Olympus, they are already linked through mutual financing provided by Mitsui. The whole thing is exactly like GM and SAAB, in that they are linked economically, but not really because the whole structure is lateral not vertical.

HIScamera, it was the Saab comparison I called 'foolish', not the person who made it. You threw it directly at me. Can you see the difference? If not, give me your e-mail address and I'l send you a drawing.And no, I'm not british.

You called that SAAB "comparison" is foolish, comparison made by a person. When you remark that a statement made by a person is foolish, you in turn imply that person to be foolish. I know, it's just too hard when you have to make all the connection, but it's true. When someone says I hate to eat Broccoli, and you say 'that's a foolish thing to say,' there, you just called that person foolish. See how it works? You're no man enough to own upto calling someone foolish, that's fine. Foolish, but fine. I call failure of educational system. It's really not your fault.

OK, perhaps the word 'foolish' was a bit on the heavy side, but I didn't mean to offend anyone. I enjoy arguing with Francis Carver - he has a sarcastic style that prompts me to respond -, but I never meant to take it beyond the bounds of good education. HIScamera is altogether a different story, though, and I won't dignify his remarks with replies anymore.That said I wish everyone a merry Christmas, Hannukah or whatever one celebrates this time of the year. And don't forget to take many, wonderful, pictures - whatever camera-lens combo you use. Taking pictures is more important than discussing photographic technicalities.

@ M1963: yes, I have an acerbic style, sorry. You need a healthy dose of sarcasm here with these cameras and optics, less we would have a fist fight over every little thing. But sometime, one has to scratch one's head as to what of these manufacturers were really thinking, and what were their bean counters thinking when the cooked up the crazy prices. It takes a lot of thinking and figuring to ascertain what is really a good deal and what is just overpriced hype.

You are so right, Francis. Manufacturers - or rather their shareholders and executives - aren't looking after our best interests, they're after huge profits. Sometimes at all costs, as we've seen with the 2008 financial crisis. In what concerns photography, a few months ago I decided I'd turn my back on overrated and overpriced lenses; I turned my attention to the OM-series lenses - yes, I have an Olympus, more exactly an E-P1 -, which I can buy for peanuts here in my country. So far I've bought the 28mm/f3.5, which you'll probably find a tad too dark and slow, and the 50mm/f1.4 (how much faster can it get?). That was when I began to understand the legacy of Olympus and its role on the photography world. And now I found the company was ruled by crooks. Can you imagine my disappointment?Still I believe Olympus will make it through. And, if we are lucky, they'll turn to more serious products, as the OM series was back then.

As well all very well know, Olympus does have some very competitive cameras in the mirrorless market. Panasonic would be well served to buy up this company on the cheap so they can learn how to make decent in-camera JPEGs. (As a GF-1 owner, I know how JPEGs suck raw eggs. In-camera JPEG may not be important for pro users, but my wife hates to shoot RAW, so having stunning Olympus-style in-camera JPEGs would have the net effect of making some of the photos that exit my Panasonic cameras look better.) If Panasonic doesn't do something, in light of the amazing NEX-7, SONY will capture the mirrorless market before we know it. I have bought heavily into the GF-1 / µ4/3 world, but having been a Minolta SLR film camera user a decade ago, the NEX-7 compels me to put those old lenses to good use. If this news spells death for Olympus, it will be interesting to see how things in the compact mirrorless market pan out over the next year.

James, it may come to you as a shock, but real pros shoot mostly JPEG. Photojournalists can't be bothered with files taking ages to carry into the memory card, and life's too short for the kind of time-consuming processing Raw implies. (Trust me - I heard this from a pro at a workshop.) And what about wedding photographers? They can't afford to wait for the image to get into the card. It takes forever.

Pro shoot both jpegs and raws depending on what their needs are. I'm not surprised to hear that PJ are shooting jpegs and raws as a back up if something goes wrong. Wedding photographers are showing jpegs quickly to their clients, but will work at least on some raws for bigger prints.

Speed and efficacy matters for pro and if jpegs can do the work, faster and good enough, they will go with jpegs. It depends what kind of photography they are doing.

You all seem to know lots of pros. How lucky you are. This reminds me the audiophile vs. studio pro debate in audio. Audiophiles like to spend $20000 in cables, sound engineers don't give a damn about wires. The same in photography: pros value speed and out of camera IQ rather than post-processing. Note, however, that I wrote 'mostly'. I know that pros who work in publicity use Raw, HDRI and all that, but that doesn't account for the majority of professional photographers.

@ M1963: That is correct indeed, Mon Kapitan. She probably knows more pros first-hand than you have heard of, I venture a wild guess. Why -- just how many do you know? And just what does any of that has got to do with the Olympus scandal, anyhow?

I guess it is you who speaks for the world's pro-class photographers, and nobody else here, correct? Good to know, thanks for the heads-up on that, M1963.

Outcome of this event will all depend on who is the head of Zaibatsu/Keiretsu that controls/influence Olympus Corporation. You have to consider that, in Japanese corporate environment, you are dealing with several companies at once, rather than one single company. It's hard to remember for rest of the world that in Japan, there is no such thing as Anti-Trust law. So if Olympus is at fault, then you can bet that there are other companies which had dealings with event as well. And ultimately few top executives who gained the most from it, although they will NEVER be revealed to the public, willingly by the Japanese police. Japanese police usually do not dig too deep into Keiretsu scandal, because it tends to get too big and too damaging for everyone.Wait a few months, and it will be back to business as usual. Sure some people, being presented to the public as upper management of Olympus, will be incarcerated, and probably be serve some time, but that would be it.

Sad to say, this is one reason why I bought a GH2 over the EP3. I love my E-P1 but I have no idea what kind of warranty or repair support I can expect a year from now. I hope like heck that Oly makes it through this (and with different management), because their optical division truly does make excellent and innovative products.

That is pretty silly... But if enough people are silly it could hurt them. Having shot for 20 years and never had a camera repaired by the factory... Just buy a used one in a year if yours fails... Normally the deprecate rapidly.

Let's try to think clearly for a few moments. Camera bodies are not investments; they're superseded by a new model (or someone else's new model) every 18 months or so. And every Olympus m4/3 lens also mounts on a Panasonic body. So buying an Olympus m4/3 body with a few lenses is pretty safe. The body will almost certainly last as long as you need it to last before you voluntarily replace it with something else, and the lenses will transfer to a Panasonic body without a hitch. The Pen cameras are delightful designs (though a little overpriced). If you really want one, buy it unafraid.

E-PM1 over-priced at $400 with the kit lens? What are people's expectations, that they will simply give them away for free? Oh yeah, they actually already did that with their promotional stunt a few months back ;) .

At these prices ($400 range) one can certainly take the risk should the company fail (unlikely IMOP). Well built cameras with great JPEG's, IBIS, etc.